6 Pitfalls A Growing Business Should Look Out For

So, your business has been successful and you want it to continue growing. Who doesn’t? But you should know that there are a number of pitfalls most growing businesses run up against. Some are things you can foresee and some are not. And many of them can be significant enough to derail your company’s growth – or even kill it completely. Here are just a few of the challenges you will probably face as your organization grows.

  1. Finding and retaining the right talent: As you expand beyond the initial startup phase it can get harder to bring in the right new talent to keep up with demand. The founding team and even that first small group of employees operated together pretty well. Everyone dove in and did whatever needed to be done day or night. As you expand beyond that group, you will be hiring people you know less well and people with different motivations (those looking for a job as opposed to building a new company). It can become a lot more difficult to identify the right people who will be a good fit. As you grow that entrepreneurial feeling starts to fade as more controls and policies are put in place. Some of the early team will adjust and, frankly, others will bristle against the additional structure. (See #5 below.)
  2. Managing cash flow: One of the most overlooked measures for small businesses is cash flow. Small business owners are used to looking at income statements (and to a lesser extent balance sheets) to understand their financial position. But, they generally spend less time concentrating on cash flow…and it can seriously complicate your growth strategies. There are tons of examples of small, expanding companies that go out of business looking profitable. They simply run aground for lack of immediate, accessible cash. It’s critical for businesses in growth mode to be aware of their cash positions and what impacts them. It is imperative that they forecast and track cash closely – looking for potential low spots. That will allow a growing company to plan accordingly – to line up a needed line of credit or business loan, concentrate on the billing/collection cycle, monitor expenses, or whatever financial controls are needed.
  3. Maintain quality control: Many times, we’ve seen businesses build a great reputation only to watch it slip as the company grows. Small businesses (any business really) need to keep their eye on the ball even while expanding their business. This will probably require the company to find a skilled, trustworthy operational manager to watch quality. The organization will also need to begin thinking about developing procedures and training new employees on how to do things “right”.
  4. Extending your brand can be expensive: Lets face it, some things that worked when the company was younger probably won’t cut it any more. There is an expectation of professionalism and sophistication. You can reach an initial batch of customers by word of mouth and less-expensive means when you are young. But as the company grows, expanding the customer base will probably start to cost more – marketing costs, sales costs, etc.. To define your brand to a broader group of customers will probably cost you more (a more sophisticated website, marketing materials, advertising, etc.). A company should be able to anticipate many of these costs, but many underestimate them.
  5. Operational structure needs to be in place. As your company grows, you have to make sure that you are ready to deal with that success. Are you ready for increased pre-sales inquiries, more calls/emails to customer service, more hits to your website, etc. As the company expands beyond that early team the need for putting the right policies and procedures in place will also become apparent. All of a sudden the company needs a travel policy, a social media policy, an expense policy, a vacation policy, a compensation/benefits plan, etc. Building a solid corporate culture firmly embedded in the company’s values and hiring people who are aligned with that culture will go a long way toward not having to go overboard with too many controls and policies. After all, you don’t want to stifle growth and creativity. You have to make sure your organization is ready to handle these increased demands.
  6. Keeping your eye on the ball. Perhaps one of the most challenging and under-appreciated challenges a growing business will face is that of attention. Most business leaders underestimate the amount of management and staff time that is required for growth. They expect to simply operate as always but just “do more of it”. This is often not the reality. The reality is that opening a new office is distracting, handling tons of new calls efficiently is difficult, manufacturing more widgets in a timely manner is challenging, managing a growing sales team can be hard, increasing server capacity and software support can be complicated, finding the right new CFO can be frustrating. It’s not just business as usual; it’s a lot of new distractions and struggles for your management team. Don’t under-estimate them.

In summary, as your company shifts into growth mode it can be fun and exciting. But, it is not without its challenges and potential pitfalls. Now, we know that no one can anticipate EVERY situation that could arise. No one can forecast exactly right. New completely unforeseen opportunities and challenges will arise. The secret is to anticipate them as much as possible – and proactively handle them.


I LOVE to help leaders improve and businesses grow!

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